E-wallets drive Russian e-commerce

LONDON: Russian consumers traditionally prefer to use cash rather than cards but they are increasingly adopting digital payment systems which are helping drive the growth of online retailing.

Online currently accounts for just 3% of total retail sales, according to a recent PwC report which questioned 1,074 people in Russia as part of a global retail survey.

But as both home and mobile internet penetration grows – in 2013, for the first time more than half of Russian households had broadband internet access – so does the propensity to shop online.

Online retail sales are growing at an estimated 26% a year and, in 2013, 41% of respondents to PwC's survey said they used their mobile phone for shopping, up from 28% a year earlier.

A preference for cash payment has not necessarily held back the sector, however, with many consumers choosing a 'click and collect' option and paying when items are picked up.

Dmitry Kostygin, chairman of Ulmart, one of Russia's biggest e-retailers, told the Financial Times that around 90% of the company's sales were picked up by customers from various collection points in Moscow and St Petersburg.

He added that around 66% of payments were cash, with cards taking a further 25% and electronic wallets the remainder.

But payment processors said the share of the latter was growing. "Cash is still king in Russia but you're starting to see more payment types like QIWI and Yandex," according to Souheil Badran, senior vice president at Digital River, a company that sets up payments systems on websites.

Ieuan Owen, senior vice president of ecommerce strategy at WorldPay, was more bullish: "These ewallets now account for between a quarter and a third of all ecommerce consumer spend in Russia," he declared.

"Given the distrust of cards, the rapid rise in the use of these payment methods by consumers and merchants is a key driver of ecommerce growth in Russia," he added.